Honda Announces Mid-Term Plan for Auto Production in Japan and the Americas

Tokyo, May 7, 1999 --- Honda Motor Co., Ltd. today announced a 3-year plan intended to increase the efficiency and flexibility of the company's global manufacturing capabilities in Japan and the Americas. Honda will invest 36 billion yen (approximately US$300 million) to introduce new production systems in Japan and more than US$400 million to construct a new plant and expand existing facilities in North America.

Japan

In Japan, Honda will further advance the competitiveness of its two major auto plants - the Suzuka Plant and the Saitama Plant's Sayama Factory - including the implementation of its next-generation Green Factory concept. The 36 billion yen investment will achieve the following:

Substantially increase the efficiency and flexibility of all production lines at Suzuka and Sayama, enabling the elimination of the number two line at Suzuka within three years while retaining Honda's current overall Japan production level of 1.25 million units.

Achieve a higher rate of capacity utilization by streamlining the number of production lines and shifts at Suzuka and Sayama from the present five lines and nine shifts to four lines and eight shifts.

Reduce the investment and time required to bring a new model to market by introducing new manufacturing techniques to existing facilities, including replacement of model-specific equipment and production processes, as well as enhancing the efficiency and speed of each process.

Concurrent with the drive to achieve greater efficiency and flexibility, Honda will transform the Suzuka and Sayama plants into Green Factories by March 2002. The Green Factory is Honda's concept of what a next-generation factory should be, including workplace improvements and minimized environmental impact.
Specific Green Factory targets include a 15 percent reduction in energy consumption from 1990 levels and an elimination of industrial wastes requiring treatment outside the factory. This project already is underway on the Suzuka number one line while other lines in Suzuka and Sayama will use future full model changeovers to introduce new production equipment.
Other major Honda auto plants around the world, including plants in North America and the UK, will also incorporate these new manufacturing systems as new or replacement models are introduced to these plants.

The Americas

While currently in the process of expanding its annual auto production capacity in the US and Canada from the present 960,000 units to 1,010,000 units by the year 2001, Honda has decided to undertake additional expansion, including the construction of a new plant to enable Honda's auto operations in the Americas to meet growing customer demand.

New facility: Honda will construct a comprehensive new $400 million automobile manufacturing facility in Lincoln, Alabama, USA to produce minivans and sport utility vehicles, as well as engines. Scheduled to begin production in spring 2002, the new plant is expected to reach its full twin capacities of 120,000 vehicles and 120,000 engines in 2003, when employment is expected to reach 1,500 associates.

Expanding existing facilities: Honda had previously announced plans to expand production in the US and Canada to 680,000 units and 330,000 units, respectively, in the year 2001. These targets remain unchanged, but new plans were announced to reach these levels.

In Canada, Honda will accelerate the timetable for attaining full capacity of 120,000 units on the new number two line to summer 1999, a full one-year ahead of schedule. Together with the original 170,000-unit capacity of the number one line, this will increase Honda's total capacity in Canada to 290,000 units per year.
Further, the second line in Canada will get an additional boost to 160,000 units annually by spring 2001. This expansion will include production of a newly designed SUV model in addition to the existing Odyssey minivan production. Honda will invest US$30 million in this 40,000-unit increase in production to achieve the previously mentioned 330,000-unit capacity in Canada.
In the US, Honda will invest US$30 million to boost auto engine production capacity in Ohio by 110,000 units to match the increase in total vehicle production capacity to 1.01 million units. Honda's Anna Engine Plant currently has a capacity of 900,000 units per year.
Through these plans, Honda will increase total North American auto production capacity to 1.13 million units by 2003. This will help establish a firm foothold in the growing light truck class segment of the North American market and position Honda to offer a full range of vehicles in North America from passenger cars to light trucks with the flexibility to meet demand for any of these products.
Furthermore, Honda has decided to sell a limited number of Mexican-built Accord sedans in the US beginning in fall 1999. This short-term measure, adopted to alleviate an acute shortage of Accords in America, is expected to supply approximately 7,000 units to the US from Honda's plant in Mexico.

As Hiroyuki Yoshino, President & CEO of Honda Motor Co., Ltd., today remarked, "Our goal is to create a more efficient, flexible global corporate structure, based on the new manufacturing systems we are building in the US and Japan, and based on deployment of new manufacturing technologies at our bases of operation worldwide. Essentially we want to take advantage of Honda's unique corporate characteristics - namely global orientation, speediness of action, and rich creativity - to become a company that people want to exist and of which great things are expected."